I'm director of content strategy at startup Exitround. I was previously a staff reporter at Forbes covering start-ups and venture capital. I'm interested in entrepreneurs who want to change the world, or have a point of view or compelling story. Email me at tgeron.news@gmail.com. I was previously a reporter for Dow Jones VentureWire where my work also appeared in the Wall Street Journal. I've also written for Red Herring, the Long Beach Press-Telegram and other outlets. In a former life I was a web developer. Follow me on Twitter tomiogeron, or Facebook , or Google+.

Forerunner Ventures Raises $40 Million Fund For Next Generation E-Commerce

Forerunner Ventures, a new micro-venture capital firm focusing on new digital commerce startups, has closed a $40 million fund.

The firm is founded Kirsten Green, who previously was an equity analyst and then a portfolio manager and investor at Montgomery Securities (now part of Bank of America) covering the retail sector. Green left in 2003 intending to start her own investing firm. She spent several years helping startups in order to get to know startups better, helping with things such as financial models and pitches to investors. Green believes there is a massive shift happening now in retail, where new online brands and changing the way business is done.

The San Francisco firm has been investing for several years–in companies such as Warby Parker, HotelTonight, and Bonobos–but has not publicly spoken about the firm until now. Forerunner focuses on both consumer-facing e-commerce startups and on technology companies that support e-commerce. The firm invests in seed and Series A deals, investing $250,000 to $500,000.

Now when investing in startups, Green’s experience working with a variety of public retail companies gives comparisons for startups. Unlike the original e-commerce model, new e-commerce startups are personalized and use new social tools to connect with consumers, but still have strong brands, she says. “One of the most important things to me is the vision of the brand,” Green says. “It’s one of the best ways to build a moat around your business.”

Consumer-facing startups Forerunner has invested in include online pants company Bonobos, subscription razor company Dollar Shave Club, online gifting company Wantful, and online beauty company Birchbox. Companies that are in the category of back-end technologies include Joor, Stellaservice and Tello. While subscription business models have become fashionable for some online retailers–and Birchbox uses the model–Green says that’s not as important as the brand that the company is building. “Birchbox I’ve never thought of it as subscription business–it’s a beauty business,” Green says. “It’s a tool to inspire a connection to the brand. (Subscription) only makes sense if it enhances the experience of getting the end product.”

Today the traditional retail model of an offline business have 200 to 500 brick and mortar stores with one website as a support for the offline stores has been flipped upside down, Green says. Now online retailers have one website where all the company’s transactions occur, but a company may add some retail stores to provide a retail experience to drive consumers back to its website. An example of this is eyeglass company and Forerunner investment Warby Parker, which is primarily an online store but has some retail presence. ”Now you understand your working capital flow and how to target a broader audience and you have a foundation for the business, then you can go offline with a lot more insight,” Green says.

Post Your Comment

Post Your Reply

Forbes writers have the ability to call out member comments they find particularly interesting. Called-out comments are highlighted across the Forbes network. You'll be notified if your comment is called out.